Carbon fee from Obama seen viable with Exxon backing

Exxon Mobil Corp. is part of a growing coalition backing a carbon tax as an alternative to costly regulation, giving newfound prominence to an idea once anathema in Washington.

Conservative economists and fossil-fuel lobbyists united in 2009 to fend off climate-change legislation that would have established a cap-and-trade mechanism. They are now locked in a backroom debate over a tax on carbon-dioxide emissions that could raise an estimated $100 billion in its first year.

A carbon tax would force electricity producers, refiners and manufacturers to pay a fee for the greenhouse gases they emit. It is gaining interest as lawmakers and President Barack Obama pledge to simplify the corporate tax code and raise revenue to narrow the deficit. The devastation from superstorm Sandy following the wildfires and drought of this summer have also increased concern about global warming.

“It does fit with the Republican idea of cleaning up the tax code, and to have a clean instrument for addressing this problem,” John Reilly, co-director of the Massachusetts Institute of Technology’s Joint Program on the Science and Policy of Global Change, said in an interview. Given this year’s weather disasters, “it’s hard to stand up and say global warming is a hoax,” he said.

The idea still faces long odds. Oregon Democratic Senator Ron Wyden said in Washington today that rounding up support for a carbon tax “is going to be a big lift politically.” Asked about it yesterday, Obama said he doubted there was enough political agreement for the tax, though he warned against delay in combating climate change.

Storm Costs

“It’s important because, you know, one of the things that we don’t always factor in are the costs involved in these natural disasters,” Obama said at a White House press conference. “We just put them off as something that’s unconnected to our behavior.”

The Washington-based American Enterprise Institute, which says it advocates libertarian and conservative values, held a full-day discussion Nov. 13 to examine how best to implement a carbon tax, which its economists say could enable a cut in corporate taxes and head off regulation by the Environmental Protection Agency. The same day, an opponent of the idea, the Competitive Enterprise Institute, filed a lawsuit against the Treasury Department, seeking private e-mails it said would show the administration is secretly pushing for a carbon tax.

“They want new sources of revenues, and this is an enormous one,” Chris Horner, a senior fellow at the Washington- based CEI, said in an interview. “This thing is gaining steam. If successful, it would be disastrous.”

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